Sustainable Fitch Provides ESG Ratings for Global Labelled Structured Bonds

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by KnowESG
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Sustainable Fitch has introduced ESG Ratings for globally labelled structured bonds and covered bonds. This follows the September introduction of ESG Ratings, Data & Analysis for corporates and financial institutions in North America, the UK, and Europe.

Sustainable Fitch now gives entity, framework, and instrument ratings for covered bonds, as well as framework and instrument ratings for ABS bonds. Sustainable Fitch will specifically rate labelled structured notes in the following sectors: RMBS, CMBS, solar ABS, auto ABS, consumer ABS, and utilities ABS.

ESG Ratings, Data & Analysis from Sustainable Fitch provides granular and transparent ESG ratings and sub-scores at the entity, framework, and instrument levels. ESG ratings are given on an absolute and fully cross-comparable rating scale, with qualitative comments from ESG experts, and are made using strict protocols that ensure the ratings' independence.

Entity Ratings assess the positive and negative impact of an issuing entity on the environment and society based on its underlying business operations, overall strategy, aims, policies and procedures, and governance.

Framework Ratings assess a financial instrument's environmental and societal impact based on the Use of Proceeds or Key Performance Indicators, as applicable, as well as the overall quality and governance of the instrument's framework.

Instrument ratings combine entity and framework ratings, providing issuer ESG context and allowing for absolute comparison of financing instruments across sectors, geographies, and labelling frameworks.

The current dataset of labelled structured bonds at Sustainable Fitch exceeds USD100 billion. This adds to the first set of USD500 billion in labelled and KPI-linked instruments issued by corporates and financial institutions in North America, the UK, and Europe. The "ESG Ratings, Data & Analysis" data feed, API, Excel Add-In, and web application are all available. By early 2023, Sustainable Fitch expects to have complete coverage of labelled bonds, including public finance, agency, and sovereign debt issuances.

Mike Simonton, Head of Sustainable Fitch, says:

“Sustainable Fitch was launched with the goal of both listening to investors and providing products that offer a comprehensive assessment of ESG fundamentals. The expansion of Sustainable Fitch’s ESG Ratings to globally labelled structured bonds and covered bonds meets critical market demand. Our ESG data and analysis combined with ESG Ratings provide investors with the necessary tools to evaluate ESG impact, outcome, and performance at a detailed individual factor level.”

Sustainable Fitch launched ESG Scores for Leveraged Finance earlier this year, providing the CLO investment community with granular assessments of environmental, social, and governance factors for leveraged finance entities and labelled issuance.

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Source: Sustainable Fitch

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